IPA: cull needed to free firms from red tape

The Australian, November 7, 2017

Unelected regulators are hampering business with red tape, ­according to the Institute of Public Affairs, which is calling for a cull of government bodies to ­return power to the parliament.

The IPA, a right-wing think tank, has warned the growth of red tape in Australia is at a “crisis point” and puts much of the blame on regulators that impose rules on business with little public accountability.

“Urgent action is needed from policymakers to reduce the burden of red tape on businesses, ­individuals and community groups,” said IPA research fellow Daniel Wild. “Red tape is the key cause of low and declining business investment, which is currently lower as a percentage of gross domestic product than under the Whitlam government. Low business investment is the central cause of low labour productivity and slow wages growth.”

An IPA report, released today, finds red tape is caused by regulatory bodies and the overlap of state and federal regulations.

The institute previously has estimated that red tape reduces economic output by $176 billion a year, the equivalent of 11 per cent of gross domestic product. “This means each Australian household would be $19,300 better off each … year (if there were no red tape),” the report says.

It argues unelected regulatory bodies are bad for democracy, with 497 public bodies involved in the design or enforcement of the federal regulatory system.

“Regulatory agencies are increasingly able to implement regulation and impose red tape without requiring the approval of parliament, and, therefore, the Australian people,” the report says. “Australian governments have vested increasing decision-making power outside parliament and into ‘independent’ bureaucratic agencies.

“These undemocratic, unelected officials have enough discretionary power to effectively make government policy.”

The report labelled the banking, corporate and competition regulators as “monolithic organisations” that are statutorily independent from parliament.

“The idealised notion of independent regulatory authorities operating in a democratic system doesn’t match reality.

“The consequence is an increasing amount of public policy is determined outside of the Australian parliament by unelected regulators. Regardless of one’s thoughts about the policy implemented by these regulators, this undermines the Australia’s democratic policy process.”

The research noted surveys showing 69 per cent of small and medium businesses say dealing with red tape takes “a lot of ­effort”, whole 68 per cent think their industry is overregulated.

It found 55 per cent of company directors think red tape the biggest impediment to growth.